ITEM NO.:

6a_Report

DATE OF
MEETING:

March 1, 2011

PORT OF SEATTLE

2010 FINANCIAL & PERFORMANCE REPORT

AS OF DECEMBER 31, 2010

TABLE OF CONTENTS

Page
I.

Portwide Performance Report

3-5

II.

Aviation Division Report

6-12

III.

Seaport Division Report

13-18

IV.

Real Estate Division Report

19-23

V.

Capital Development Division Report

24-26

VI.

Corporate Professional & Technical Services

27-29

2

I.

PORTWIDE FINANCIAL & PERFORMANCE REPORT 12/31/10

EXECUTIVE SUMMARY
Financial Summary
The Port's 2010 total operating revenues were $470.5 million, $6.3 million below budget. Aeronautical revenues
were $198.3 million, $12.0 million below budget mainly due to reduced debt service on variable rate bonds. Other
operating revenues were $272.2 million, $5.7 million higher than budget primarily due to higher revenues from
Concessions, Container, Cruise, Grain, and Dock & Industrial Properties, partially offset by lower revenues from
Public Parking, Rental Cars, and Security & Environmental Grants. Total operating expenses were $253.2 million,
$9.5 million below budget mainly due to savings from some vacant positions, lower benefits costs, outside services,
and utilities costs. Operating income before depreciation was $217.3 million, $3.2 million above budget. Operating
income after depreciation was $56.5 million, $1.0 million higher than the budget. Port-wide capital spending was
$202.6 million for the year, $104.3 million below the budgeted $306.9 million.

Operating Summary
We had an outstanding year on the operating activities in 2010. Airline passengers at Sea-Tac were 31.6 million
for 2010, 1.0% higher than 2009. Enplanements growth was also 1.0% higher than 2009 despite a decrease of 3%
in landed weight. The Seaport division had a record-breaking year for both the Container and Cruise in 2010.
With 2,140K TEU's, we surpassed the previous high set in 2005 at 2,088K TEU's. This represented a 35.0%
increase compared to 2009 levels and it's the biggest increase among all the West coast ports. The 2010 cruise
season broke the records with 223 sailing and 931,698 passengers. Cruise passenger volumes exceeded the prior
record of 886,039 passengers, set in 2008, by 5.2%. For the Real Estate division, occupancy levels at Commercial
Properties were at 88% at the end of the 2010, which is below the 90% target for the 2010 budget, but above
comparable statistics for the local market at 84%. Moorage occupancies at Fishermen's Terminal exceeded
budget targets. Recreational Marinas were on target at 94% occupied. The 2010 event activity for Bell Harbor
International Conference Center, Maritime Event Center and Smith Cove Cruise Terminal, as measured by
number of attendees/guests, was 26% over budget and 23% over 2009.

Key Business Events
We had a very challenging but exciting year in 2010. The Airport had new air service to Osaka in June and the
Yellow Cab contract with the Port started on November 1. Seaport executed the new lease with PCC Logistics at
Terminal 104 and Louis Dreyfus exercised option for 5 year lease extension at Terminal 86. This was also the
first year of using the Smith Cove Cruise Terminal as an event site. Furthermore, we closed sale on portions of
Eastside Rail Corridor to the City of Redmond and Puget Sound Energy. In addition, the SAO Performance audit
of the Port's real estate management was completed and the Port received commendation from the SAO contract
audit firm (TCBA) for the excellent cooperation and support received from the Port. On the environmental front,
we not only saw a great success in the Clean Truck Program but also earned the AAPA award for Environmental
Compliance Assessment Program and the ENERGY STAR label for the Pier 69 headquarters building.
Moreover, we completed and unfolded Port's Centennial Website with map, timeline and stories of the
Port. Finally, we completed a couple of bond refunding in 2010 for a total of $29.7 million present
value savings and we received ratings upgrades from Moody's and S&P.

Major Capital Projects
We completed a number of capital projects in 2010. The Runway 16C panel replacement completed ahead of
schedule and on budget. Other key projects completed in 2010 included the Emergency Generators, Burien
Demolition, Town & Country Demolition, T-91 Cruise Terminal Modification, T115 Dock Reconstruction
completed 2Q 2010, and T-5 Maintenance Dredging. We also successfully implemented enterprise asset and
service management software, replaced the Permit Compliance Tracking System, enabled free wireless access at
the airport, expanded the ticketing system at the airport, and deployed security technology and infrastructure for
the Marine Domain Awareness project. Additionally, we continued to make progress on the Consolidated Rental
Car Facility projects, Precondition Air project, Terminal Realignment project, North Harbor Island Mooring
Dolphins construction project, and East Marginal Way Grade Separation project.

3

I.

PORTWIDE FINANCIAL & PERFORMANCE REPORT 12/31/10

INCOME STATEMENT

Income Statement
As of Date: 2010-12-31
2009

2010

2010

2010 Bud Var

Actual

Actual

Budget

$

Aviation

328,239

342,174

354,299

(12,125)

-3.4%

13,935

4.2%

Seaport

90,392

97,279

92,544

4,735

5.1%

6,887

7.6%

Real Estate

30,430

30,391

29,923

468

1.6%

(39)

-0.1%

$ in 000's

%

Change from 2009
$

%

Revenues:

Capital Development

-

36

-

36

0.0%

36

n/a

Corporate

374

610

18

592

3289.4%

237

63.3%

449,435

470,490

476,784

(6,293)

-1.3%

21,056

4.7%

Aviation

122,747

126,481

127,745

1,264

1.0%

3,735

3.0%

Seaport

21,362

19,253

22,466

3,213

14.3%

(2,110)

-9.9%

Real Estate

28,346

30,735

31,629

894

2.8%

2,388

8.4%

Capital Development

7,831

9,335

8,898

(437)

-4.9%

1,504

19.2%

Corporate

65,481

67,391

71,958

4,567

6.3%

1,911

2.9%

Total O&M Costs

245,767

253,195

262,696

9,501

3.6%

7,428

3.0%

Operating Income Before Depreciation
Depreciation

203,668
157,068

217,295
160,775

214,088
158,575

3,208
(2,199)

1.5%
-1.4%

13,627
3,707

6.7%
2.4%

Operating Income after Depreciation

46,600

56,520

55,512

1,008

1.8%

9,920

21.3%

Total Revenues
Operating & Maintenance:

IMPORTANT NOTE:
We reclassified $2.2 million operating grant revenues and $20.0 million environmental expenses from operating
accounts to non-operating accounts after the 2010 budget was finalized. The numbers shown in the "Budget"
columns hereinafter reflect all the changes after the account reclassifications.
Seaport, Real Estate and Corporate revenues for 2009 were also reduced by $633 thousand, $5 thousand and
$732 thousand, respectively due to reclassification from operating to non-operating revenues and expenses were
also reduced $3.8 million in Seaport and $124 thousand in Real Estate in order provide meaningful comparison.
All the numbers in the table above are on an Org basis while the actual numbers for the operating divisions are on
a Subclass basis.

4

I.

PORTWIDE FINANCIAL & PERFORMANCE REPORT 12/31/10

KEY PERFORMANCE INDICATORS
2009
Actual

2010
Actual

2010
Budget

Enplanements (in 000's)

15,610

15,773

15,361

412

2.7%

163

1.0%

Landed Weight (lbs in 000's)

20,388

19,786

20,364

(578)

-2.8%

(602)

-3.0%

Passenger CPE (in $)

10.92

11.63

12.69

(1.06)

-8.4%

0.7

6.5%

Container Volume (TEU's in 000's)

1,585

2,140

1,600

540

33.8%

555

35.0%

Grain Volume (metric tons in 000's)

5,512

5,491

5,000

491

9.8%

(21)

-0.4%

875

932

849

83

9.8%

57

6.5%

Commercial Property Occupancy

88.0%

88.0%

90.0%

-2.0%

-2.2%

0.0%

0.0%

Shilshole Bay Marina Occupancy

95.5%

94.0%

94.6%

-0.6%

-0.6%

-1.5%

-1.6%

Fishermen's Terminal Occupancy

80.6%

87.0%

78.5%

8.5%

10.8%

6.4%

7.9%

Cruise Passenger (in 000's)

Actual/Budget
Var Var %

2010 vs. 2009
Chg Chg %

CAPITAL SPENDING RESULTS
Division
($ in millions)
Aviation
Seaport
Real Estate
Corporate
Total

2010
Actual
$

$

2010
Budget
Budget Variance

183.6 $ 247.6 $ 64.0 $
11.2
30.9
19.7
4.0
11.8
7.8
3.8
16.7
12.8
202.6 $ 306.9 $ 104.3 $

Plan of
Finance
275.8
30.6
12.1
10.5
329.1

PORTWIDE INVESTMENT PORTFOLIO
The investment portfolio for the fourth quarter of 2010 earned 1.55% against our benchmark (The Bank of
America Merrill Lynch 3-year Treasury/Agency Index) of 0.64%.For the past twelve months the portfolio has
earned 2.17% against the benchmark of 0.72%. Since the Port became its own Treasurer in 2002, the Port's
portfolio life-to-date has earned 3.58% against our benchmark of 2.65%.

5

II.

AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10

FINANCIAL SUMMARY
2008
Actual

2009
Actual

2010
Actual

2010
Budget

Actual/Budget
Var $
Var %

204,361

182,534

198,329

210,367

(12,038)

-5.7%

150,528

137,348

135,418

135,128

290

0.2%

3,440

8,359

8,426

8,803

(377)

-4.3%

Operating Revenues

358,329

328,241

342,173

354,299

(12,126)

-3.4%

Operating Expenses

192,641

175,482

177,871

182,075

4,203

2.3%

2,542
-

1,991
1,196
(4,016)

3,271
-

2,971
-

(300)
-

-10.1%
n/a
n/a

Total Operating Expenses

195,183

174,654

181,142

185,045

3,903

2.1%

Net Operating Income

163,146

153,587

161,031

169,254

(8,223)

-4.9%

Capital Expenditures

209,813

191,479

183,578

247,567

63,989

25.8%

$ in 000's
Operating Revenues
Aeronautical
Non-Aeronautical
Other

Environmental Remediation Liability
VSP, HR10 & Unemployment
OPEB Reversal






A.




Aeronautical revenues were $12.0 million lower than budget due to lower interest rates of variable rate
bonds, not utilizing commercial paper financing as budgeted, and lower operating costs.
An overage of $290K in non-airline revenues was realized as strong Concessions sales more than offset
underperforming Public Parking.
Operating expense was favorable by $3.9 million mainly due to savings from payroll benefits and Corporate
allocations, offset with deficits from unbudgeted back-up power generator costs, janitorial contract cost of
living increase, unemployment benefits, and B&O taxes budgeted using incorrect rates..
$183.6 million was spent on capital projects in 2010, 74.2% of the 2010 budget of $247.6 million.

BUSINESS EVENTS
Terminal realignment in progress.
Resolved zoning issue with City of Seatac related to airport property and possible new development by FAA.
Yellow Cab contract began November 1.

STRATEGIC INITIATIVES PERFORMANCE







Customer Service
O New service to Osaka started in June
O Initiated terminal realignment with airline agreement
Non-aeronautical Business
o New concession agreements with taxis and limousine service
Environmental Leadership
o Completed design and initiated construction on PC Air Project
o Secured grants for electric ground service equipment project
Supportive Community
o Executed voluntary runway use plan with FAA
Employee Development
o Completed internal internship program with eight interns
Asset Management
o South Satellite as prototype

6

II.

AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10

B.

KEY PERFORMANCE METRICS
2009
Q4
3,686
4,792

Figures in 000s

Enplanements
Landed Weight

2010
Q4
3,842
4,874

%
Variance
4.2%
1.7%

2009
Actual
15,610
20,388

Landed Weight vs. Prior Year

10%
6.15%
0.97%

2.42%
-0.79%

0.35%

2.52%

3.19%

3.53%

1.34%

Growth Rate

Growth Rate

Enplanements vs. Prior Year

5%
0%

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
-5%




4%
2%
0%
-2%
-4%
-6%
-8%
-10%
-12%
-14%

1.29% 1.32%

2.54%

0.89%

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
-6.73%

-3.28% -0.91% -0.67% -0.57%

-7.89%
-10.33%

-11.65%

-3.08% -1.29% -2.35%

Enplanements in the fourth quarter of 2010 were 4.2% greater than enplanements in the fourth quarter of
2009.
There was an overall growth of 1% in enplaned passengers over last year despite a decrease of 3% in landed
weight.

Non-Aero NOI ($ in 000s)
Passenger Airline CPE
Total Operating Cost / Enpl
Debt Service Coverage



2010
%
Actual Variance
15,773
1.0%
19,786
-3.0%

2008
Actual
86,474
11.89
12.13
1.40

2009
Actual
81,159
10.92
11.19
1.41

2010
Actual
78,203
11.63
11.48
1.39

2010
Budget
75,688
12.69
12.05
1.35

Actual/Budget
Var $
Var %
2,515
3.3%
1.06
8.3%
0.56
4.7%
0.04
2.6%

CPE came in lower than the budget primarily due to significant savings to Terminal debt service, lower
operating costs and increased enplanements.

7

II.

AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10

C. OPERATING RESULTS
Division Summary
$ in 000's

2008
Actual

2009
Actual

2010
Actual

2010
Budget

Actual/Budget
Var $
Var %

Total Operating Revenues

358,329

328,241

342,173

354,299

(12,126)

-3.4%

Operating Expenses
Salaries & Benefits
Outside Services
Utilities
VSP, HR10 & Unemployment Savings
OPEB Reversal
Environmental Remediation Liability
Other Expenses
Baseline Airport Expenses
Corporate Expenses
Police Expenses
Capital Development/Other Expenses

89,458
31,928
12,636
2,542
6,135
142,699
34,940
15,287
2,257

80,804
21,509
13,209
1,196
(4,016)
1,991
8,183
122,877
31,181
14,461
6,135

76,036
22,519
11,381
3,271
13,275
126,481
32,558
14,317
7,785

78,103
24,848
12,762
2,971
9,063
127,745
34,776
15,170
7,354

2,067
2,329
1,381
(300)
(4,212)
1,264
2,217
853
(431)

2.6%
9.4%
10.8%
n/a
n/a
-10.1%
-46.5%
1.0%
6.4%
5.6%
-5.9%

Total Operating Expenses

195,183

174,654

181,142

185,045

3,903

2.1%

Net Operating Income

163,146

153,587

161,031

169,254

(8,223)

-4.9%

Depreciation Expense

107,349

117,731

119,538

116,933

(2,605)

-2.2%

Non-Operating Rev/(Exp)
Grants & Donations Revenues
Passenger Facility Charges
Customer Facility Charges
Other Non-operating Rev/(Exp)
Total Non-Operating Rev/(Exp)

49,461
60,708
23,534
(103,316)
30,386

74,323
59,689
21,866
(109,398)
46,481

30,040
59,744
23,243
(122,549)
(9,522)

37,208
58,535
22,475
(127,848)
(9,629)

(7,169)
1,209
768
5,298
107

-19.3%
2.1%
3.4%
-4.1%
-1.1%

86,183

82,337

31,971

42,692

(10,721)

-25.1%

Total Revenue Over Expense







Operating revenues were $12.1 million unfavorable overall due to lower revenue requirements for Air
Terminal operations from reduced debt service on variable rate bonds.
Operating expense was $4 million favorable.
o Savings are from payroll benefits $2M, utilities commodities $1.4M, International Lounge expenses
$218K, deferral of South Access Study $450K, FTE vacancies $218K and Corporate and Police
allocations $3.0M.
o Budget deficits are from back-up power generators not budgeted $1.6M, litigated injury and damages
claims $1.0M, janitorial contract cost of living increase $255K, unemployment benefits $400K, and
B&O taxes budgeted using incorrect rates $550K.
Grants and Donations lower than budget due to delayed projects spending of PC Air Vale grant $5.3M and
Parkside Elementary HSD $1.9M.
Customer Facility Charges over budget due to rental car transaction days staying 5% over budget
assumptions.

8

II.

AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10

Aeronautical Business Unit Summary

$ in 000's

2008

2009

2010

2010

Actual/Budget

Actual

Actual

Actual

Budget

Var $

Var %

Revenues requirement:
Capital Costs

81,535

72,013

82,083

92,610

10,527

11.4%

Operating Costs net Non-Aero

131,024

118,456

122,985

125,605

2,620

2.1%

212,559

190,469

205,067

218,215

13,147

6.0%

Total Costs
FIS Offset

(5,250)

(5,250)

(7,000)

(7,000)

-

0.0%

Other Offsets

(15,686)

(16,441)

(14,825)

(15,062)

(237)

-1.6%

Net Revenue Requirement

191,623

168,778

183,243

196,153

12,911

6.6%

Other Aero Revenues

12,738

13,757

15,087

14,215

(871)

-6.1%

204,361

182,534

198,329

210,369

12,039

5.7%

Total Aero Revenues
Less: Non-passenger Airline Costs

13,039

12,074

14,885

15,485

(599)

-3.9%

Net Passenger Airline Costs

191,323

170,460

183,444

194,884

12,639

6.5%

2008

2009

2010

2010

Actual/Budget

Actual

Actual

Actual

Budget

Var $

Var %

Cost Per Enplanement:
Capital Costs / Enpl

5.20

6.03

0.83

13.7%

8.39

7.59

7.80

8.18

0.38

4.6%

Offsets

(1.30)

(1.39)

(1.38)

(1.44)

(0.05)

3.7%

Other Aero Revenues

0.79

0.88

0.96

0.93

(0.03)

-3.4%

Non-passenger Airline Costs





4.61

Operating Costs / Enpl

Passenger Airline CPE




5.22

(0.84)

(0.77)

(0.94)

(1.01)

(0.06)

6.4%

11.89

10.92

11.63

12.69

1.06

8.3%

Capital costs lower than budget due to reduced debt service on variable rate bonds.
Operating costs were $2.6 million lower due to cost savings from payroll benefits and Corporate and Police
allocations.
Other offsets are lower than budget due to reduced Terminal debt service.
Other aeronautical revenues were greater than budget due to airfield land rental and gate parking revenues.
Passenger airline cost per enplanement (CPE) was $11.63, a reduction of $1.02 from budget. With the
budgeted enplanements, CPE would be $11.98, a reduction of $.71.

9

II.

AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10

Non-Aero Business Unit Summary
$ in 000's
Revenues:
Public Parking
Rental Cars
Concessions
Other

2008
Actual

2009
Actual

2010
Actual

2010
Budget

Actual/Budget
Var $
Var %

59,111
35,592
33,181
22,644

49,688
33,321
33,482
20,858

49,416
30,309
33,765
21,929

51,812
31,014
29,953
22,350

(2,396)
(705)
3,812
(421)

-4.6%
-2.3%
12.7%
-1.9%

Total Revenues

150,528

137,348

135,418

135,128

290

0.2%

Operating Expense

61,279

55,916

54,743

56,732

1,988

3.5%

Share of terminal O&M
Less utility internal billing
Net Operating & Maint
Net Operating Income

16,396
(13,515)
64,160
86,367

17,011
(16,738)
56,189
81,159

16,935
(14,464)
57,215
78,203

17,174
(14,466)
59,440
75,688

238
2
2,225
2,515

1.4%
0.0%
3.7%
3.3%

2008
Actual

2009
Actual

2010
Actual

2010
Budget

Actual/Budget
Var $
Var %

Revenues Per Enplanement
Parking
Rental Car
Concessions
Other
Total Revenues

3.67
2.21
2.06
1.41
9.36

3.18
2.13
2.14
1.34
8.80

3.13
1.92
2.14
1.39
8.59

3.37
2.02
1.95
1.45
8.80

(0.24)
(0.10)
0.19
(0.06)
(0.21)

-7.1%
-4.8%
9.8%
-4.4%
-2.4%

Primary Concessions Sales / Enpl

10.29

9.66

9.99

9.78

0.21

2.1%







Public Parking revenues shortfall due to decrease of short-term transactions and the Doug Fox contract.
Positive transactions trend in the past four months.
Rental Car revenues were budgeted using higher industry gross sales.
Concession revenues were better than expected due to space rental income $1.1M, advertising $500K, food
& beverages $1.1M, retail/duty free $1M, Google Wi-Fi deal.
Concessions revenues were higher than budgeted due to steady gains in sales per enplanement (actual $9.99
vs. budget of $9.78).
Operating expense under spent due to outside services not utilized for the Club International Lounge $512K.

10

II.

AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10

Non-Aero Activity Summary
2008
Actual
Garage Parking
Transactions: 0-3 Hours
Transactions: 3-24 Hours
Transactions: 1-4 Days
Transactions: +4 Days

2009
Actual

2010
Actual

2010
Budget

2010 Var
to Budget

2010 vs 2009 Yr to Yr
Actual
% Var

1,676,276
1,581,271
1,413,600
1,516,420
(102,820)
195,224
164,924
168,604
171,501
(2,897)
419,077
351,011
357,594
368,104
(10,510)
130,758
105,862
105,670
113,468
(7,798)
2,421,335
2,203,068
2,045,468
2,169,493
(124,025)
$ 53,548 $ 44,797 $ 45,060 $ 46,911 $ (1,851) $

(167,671)
3,680
6,583
(192)
(157,600)
263

-10.6%
2.2%
1.9%
-0.2%
-7.2%
0.6%

Rental Cars
Transactions Cars
Transactions Days
Revenue to Port ($000)

1,210,954
1,019,534
1,075,568
1,064,000
5,199,183
4,388,906
4,695,879
4,495,000
$ 28,474 $ 26,140 $ 23,129 $ 23,834 $

11,568
200,879
(705) $

56,034
306,973
(3,011)

5.5%
7.0%
-11.5%

Ground Transportation
Trips
Revenue to Port ($000)

$

2,145,898
1,919,508
1,790,374
1,949,389
(159,015)
4,691 $
4,629 $
4,814 $
4,432 $
383 $

(129,134)
185

-6.7%
4.0%

Primary Concessions
Sales
SPE
Revenue to Port ($000)

165,391,237 150,682,463 157,551,180 150,123,000 7,428,180.00 6,868,717.00
10.29
9.66
9.99
9.78
0.21
0.33
$ 22,594 $ 20,593 $ 21,617 $ 19,516 $
2,101 $
1,024

4.6%
3.4%
5.0%

Revenue to Port ($000)

Garage Parking
 Transactions: Number of vehicles paying to park in the General & Direct garage parking.
 Revenue to Port: Revenue from airport garage parking (net of all taxes).
Rental Cars
 Revenue to Port: 10% of gross sales generated by rental cars (does not include space rent).
Primary Concessions
 Sales: Total sales generated by the Primary Concessionaires.
 Revenue to Port: Revenue generated by Food/Beverage and Retail/Duty Free.

11

II.

AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10

Net Cash Flow: NOI after Debt Service and Interest Income
$ in 000's
Aeronautical
Net Operating Income (NOI)
Debt Service
NOI After Debt Service

2008
Actual

2009
Actual

2010
Actual

2010
Budget

Actual/Budget
Var $
Var %

72,583
78,526
(5,943)

65,985
68,767
(2,781)

74,402
73,080
1,323

84,763
83,607
1,156

(10,360)
10,527
167

-12.2%
12.6%
14.5%

86,474
41,762
44,712

81,159
39,241
41,917

78,203
41,752
36,451

75,688
40,921
34,767

2,515
(830)
1,684

3.3%
-2.0%
4.8%

Fuel Hydrant Revenue

3,440

8,359

8,426

8,803

(377)

-4.3%

Total Aviation
NOI
Debt Service
NOI After Debt Service

162,496
120,288
42,208

155,503
108,008
47,495

161,031
114,831
46,200

169,254
124,528
44,726

(8,223)
9,697
1,474

-4.9%
7.8%
3.3%

11,462
(2,926)
50,745

8,853
(7,845)
48,503

6,297
(7,912)
44,585

7,065
(7,845)
43,946

(768)
(67)
639

-10.9%
0.8%
1.5%

Non-Aeronautical
Net Operating Income (NOI)
Debt Service
NOI After Debt Service

Add ADF Interest Income
Less Non-Cash Fuel Hydrant Revenue
Net Cash Flow after D/S & Interest Inc.

D.

CAPITAL SPENDING RESULTS

$ in 000's
Rental Car Facility
Third Runway
North Expressway Relocation Phase 1
Runway 16C-34C Panel Replacement
Loading Bridges Utilities
Alaska Air 2 Step Ticket Counter
Garage Escalator and "A" Elevator Upgrade
Apron Pavement Rehabilitation - 3
All Other
Total Aviation





2010
Actual
143,076
1,897
2,781
2,736
235
1,265
1,359
30,229
183,578

2010
Budget
174,699
7,714
5,600
5,450
2,900
2,015
2,300
2,382
44,507
247,567

Actual/Budget
Var $
Var %
31,623
18.1%
5,817
75.4%
2,819
50.3%
2,714
49.8%
2,665
91.9%
2,015
100.0%
1,035
45.0%
1,023
42.9%
14,278
32.1%
63,989
25.8%

2010
Plan of
Finance
157,818
5,549
13,000
3,500
3,811
2,500
89,654
275,832

Rental Car Facility savings from favorable bids, delays in expenditures. Turner's construction expenditures
have lagged behind the cash flows they provided because ORI, BMF and Main Terminal Improvements
projects have experienced schedule delays.
Pond M of Third Runway project will be completed in 2011.
Runway 16C/34C panel replacement bids came in significantly under engineer's estimate.

12

III.

SEAPORT DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10

FINANCIAL SUMMARY

$ in 000's

2009
Actual

Operating Revenue

89,844

2010
Actual

2010
Budget

96,060

90,134

Var $

Budget
Var %

5,925

7%

Security Grants

847

1,791

2,535

(744)

-29%

Total Revenues

90,691

97,850

92,669

5,181

6%

Total O perating Expenses

40,545

39,321

43,324

4,004

9%

Net O perating Income

50,145

58,530

49,345

9,185

19%

Capital Expenditures

44,677

11,172

30,784

19,612

64%








A.



Total Seaport revenues were $5,181K favorable for the year partially due to a non-cash accounting
adjustment resulting from a modification in GAAP straight line rent adjustment methodology required for
container terminal leases. Revenues were also favorable due to higher crane rent, cruise revenue and grain
volumes, partially offset by lower than anticipated Environmental Grant and Security Grant revenue.
Total Operating Expenses were $4,004K favorable due to delays in starting some budgeted projects and other
anticipated work that was not necessary, third party security grant project costs which were pushed back until
2011, open Seaport positions, lower than budgeted benefit costs, expense contingency amounts that were not
needed, and lower corporate expenses.
Full Year 2010 Net Operating Income of $58,530K is $9,185K favorable to the 2010 Budget and $8,384K
higher than 2009 Actual NOI.
Total capital spending for 2010 was $11.2 million or 36% of the Approved Annual Budget.

BUSINESS EVENTS
The Seattle Harbor had a record-breaking year in 2010 at 2,140K TEU's surpassing the previous high set in
2005 at 2,088K TEU's. 2010 results represent a 35.0% increase compared to 2009 levels.
Consolidated West Coast Port results for 2010 show an overall increase in TEU volume of 17.7% compared
to volumes in 2009.
TEU Volume (in 000's)
Long Beach
Los Angeles
Oakland
Portland
Prince Rupert
Se attle
T acoma
Vancouver
We st Coast - Total:





2010
6,263
7,832
2,330
181
343
2,140
1,455
2,514
23,059

2009
5,068
6,749
2,045
174
265
1,585
1,546
2,152
19,584

% change
23.6%
16.0%
13.9%
4.0%
29.5%
35.0%
-5.8%
16.8%
17.7%

Grain vessels shipped 5,491K metric tons of grain through Terminal 86 in 2010. Amount is consistent with
2009 grain volumes of 5,512 metric tons. 2010 actual volume is 10% higher than 2010 budgeted volume.
The 2010 cruise season ended on October 1st, breaking Seattle cruise records with 223 sailing and 931,698
passengers. Passenger volumes exceeded the prior record of 886,039 passengers, set in 2008, by 5.2%.
Inaugural year for use of Smith Cove Cruise Terminal as an event site.

13

III.







SEAPORT DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10
Executed new lease with PCC Logistics at Terminal 104.
Louis Dreyfus exercised option for 5 year lease extension at Terminal 86.
Implementation of the Northwest Ports Clean Air Strategy continued:
o At-Berth Clean Fuels Vessel Incentive Program (ABC Program) - 400 participating calls were made in
2010. Overall 72.4% of frequent caller vessels participated in the program which was just slightly below
the goal of 80%.
o Under the Scrappage and Retrofits for Air in Puget Sound program (ScRAPS Program) 270 pre-1994
drayage trucks have been taken off the road since the inception of the program.
AAPA award for Environmental Compliance Assessment Program.
Authorization of $3.4 million investment in the Spokane Street Widening project.

14

III.

SEAPORT DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10

B.

KEY PERFORMANCE METRICS

Container Volume - TEU's in 000's

Grain Volume - Metric Tons in 000's

Cruise Passengers in 000's

Net Operating Income Before Depreciation By Business
$ in 000's
Containers

2009
Actual

2010
Actual

2010
Budge t

2010 Bud Var
$
%

Change from 2009
$
%

37,250

44,513

37,694

6,819

18%

7,263

19%

Container Support Props

(894)

576

974

(398)

-41%

1,470

-164%

Cruise

5,340

6,987

5,091

1,896

37%

1,647

31%

Grain

4,748

4,955

4,396

559

13%

206

4%

Docks/Industrial Props

5,033

4,146

2,708

1,438

53%

(886)

-18%

Security

(1,307)

(1,477)

(1,618)

141

9%

(169)

-13%

(24)

(1,170)

100

(1,270)

-1270%

(1,146)

-4823%

50,145

58,530

49,345

9,185

19%

8,384

17%

Envir Grants/Remed Liab
Total Se aport

15

III.

SEAPORT DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10

C.

OPERATING RESULTS
2009

2010
Budget

$

96,060

90,134

5,925

7%

6,216

7%

Security Grants

847

1,791

2,535

(744)

-29%

944

111%

Total Revenue

90,691

97,850

92,669

5,181

6%

7,160

8%

Direct Expenses

Operating Revenue

Actual

%

Change from 2009

89,844

$ in 000's

Actual

2010 Bud Var

$

%

25,108

20,780

22,698

1,918

8%

(4,328)

-17%

Security Grant Expense

860

1,983

2,689

706

26%

1,123

131%

Envir Remediation Liability

24

1,170

1,500

330

22%

1,146

4823%

Divisional Allocations

2,123

2,354

2,575

221

9%

231

11%

Corporate Allocations

12,430

13,033

13,862

829

6%

603

5%

Total Expense

40,545

39,321

43,324

4,004

9%

(1,225)

-3%

NO I Before Depreciation

50,145

58,530

49,345

9,185

19%

8,384

17%

Depreciation

29,385

31,212

31,974

763

2%

1,827

6%

NO I After Depreciation

20,761

27,318

17,370

9,947

57%

6,557

32%

Total Seaport revenues were $5,181K favorable to budget. Key variances are as follows:
Containers and Support Properties - favorable $4,480K
 Containers $4,843K favorable. Space Rent favorable $1,858K due to modification in GAAP straight line
rent adjustment methodology for Terminal 5 and the addition of Terminals 30 and 46 in the calculation.
Crane Rent Revenue $2,710K favorable due to higher volumes and related crane usage at Terminal 5 and
Terminal 18. Intermodal Revenue $228K favorable due to higher Terminal 5 intermodal volumes.
 Support Properties ($363K) unfavorable due to lower than budgeted rents from Terminal 104, continued
warehouse vacancy at Terminal 106, and lower than anticipated liquid bulk volumes at the Terminal 18
facility.
Cruise and Industrial Properties - favorable $3,045K
 Cruise $1,359K favorable due to higher than anticipated passenger volumes $589K, additional Savings Rent
$348K from cost savings on CTA allowable expenses, higher than anticipated utility revenue $227K
(correction to utility billing methodology), and maintenance reimburseable work not anticipated in the budget
$196K.
 Bulk Terminals $502K favorable. Terminal 86 grain volume exceeded budget by 10%.
 Docks $675K favorable due to higher use of berths by fishing preferential use customers partially offset by
lower usage by barges and other non-fishing vessels $219K. Additional favorable variances due to revenue
from maintenance and other services performed for customers $231K, higher than anticipated storage fee
revenue $128K and utility revenue $99K.
 Industrial Properties $509K favorable primarily due to higher than anticipated utility revenue $331K at
Terminal 91. Space rent was also higher than budget $135K due to increased rents from leases which were
amended after completion of the 2010 budget and higher than anticipated Carnitech percentage rent.
Environmental Grants - unfavorable ($1,600K)
 Environmental Grant revenue ($1,600K) unfavorable due to overstatement of grant in budget. Amount
represents a grant received by the Port which is passed through to the City. Amounts received should have
been budgeted as offset by amounts paid to the City for a net amount of $0.
Security Grants - unfavorable ($744K).
 Security Grants ($744K) unfavorable due to Rounds 6 and 7 grant activities commencing later than planned.
Unfavorable revenue variance is largely offset by corresponding favorable expense variance.

16

III.

SEAPORT DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10

Expenses were $4,004K favorable to budget. Key variances:











Security Grant Expenses favorable $706K due to Rounds 6 and 7 grant activities commencing later than
planned. Favorable expense variance is offset by corresponding unfavorable revenue variance.
Environmental Liability Expense favorable $330K due to lower estimated future clean-up costs than
assumed in Budget.
Seaport Salaries and Benefits (excluding Security) direct charged to Seaport favorable $415K due to
elimination of the SPT&S Director's position, later than expected hiring of eastern Washington Rep position
in Asia Business Development, and lower than expected benefits expense (as a percentage of salaries).
Advertising, Promotional Hosting, and Trade Business & Community expense favorable $172K
primarily due to lower than anticipated spending by Commercial Strategy group ($148K).
Outside Services (excluding Corporate, CDD, and Security Grants) were favorable $1,104K due to delays in
starting budgeted projects and/or work that was anticipated, but then not needed in 2010. Projects and
programs with later work commencement include Environmental Services $287K for storm water and air
programs, a condition assessment and associated repairs at Terminal 103, asphalt and roof repairs at Terminal
46 and a rail survey at Terminal 115. Work that was anticipated, but then not needed were studies by
Strategic Planning $55K, crane work at Terminal 46, and tenant improvements/brokerage fees at Terminal
115. In addition, an expense project to install bollards at Pier 90 has been re-scoped and is proceeding as a
capital project $200K. Budgeted work for under dock inspection work and Terminal 5 maintenance dredging
are on schedule, but a portion of the actual costs were reflected in CDD actual expenses.
Miscellaneous Expense was favorable $399K due to relocation expenses budgeted for 2010, but largely
deferred until 2011 ($139K) and due to unused Seaport Division Contingency budget ($500K), partially
offset by higher than budgeted tribal mitigation costs ($147K).
Corporate costs, direct and allocated were favorable $1,225K due to lower than anticipated direct charges
and allocations from virtually all orgs/departments including Contingencies $196K, Police $190K,
Accounting and Financial Reporting $159K, Human Resources $126K, Risk $117K, and Legal $100K.
CDD costs, direct and allocated were unfavorable ($280K) primarily due to higher than anticipated direct
charges and allocations from Port Construction Services, for various locations including the Pier 28 barge
layberth project which had been deferred from 2009.
All other variances netted to an unfavorable ($67K) or less than 1% of Total Expenses Budgeted.

NOI Before Depreciation was $9,185K favorable to budget.
Depreciation was $763K, or approximately 2%, favorable to the 2010 Budget.
NOI After Depreciation was $9,947K favorable to budget.

Change from 2009 Actual
NOI Before Depreciation for 2010 increased by $8,384K from 2009. Revenue is up $7,160K from the prior year
due to higher lease rents related to the newly redeveloped Terminal 30 ($2,900K), modification in GAAP straight
line rent adjustment methodology for Terminal 5 and the addition of Terminals 30 and 46 in the calculation
($1,808K), full year effect of the blended eagle rate increase effective mid-2009 ($1,059K), higher cruise revenue
$1,359K and higher security grant revenue $944K. Amounts were partially offset by 2009 revenue from King
County for the T30 Upland Dredge Disposal project ($1,382K). Overall expenses in 2010 are $1,225K lower due
a significant reduction in direct expenses from 2009 related to the Terminal 30 Upland Dredge Disposal project
$2,644K, expensing of design costs associated with the Terminal 25 South Container Yard project and the
expensing of costs for the Pier 24 habitat project $1,322K, and bad debt expense for T104 lease. Amount is
largely offset by higher security grant expenses, environmental remediation liability expense and corporate and
divisional allocations.

17

III.

SEAPORT DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10

D.

CAPITAL SPENDING RESULTS
2010 Actual

2010
Approved
Budget

Variance
EstActs to
Budget

Terminal 18

884

4,771

3,887

19%

3,319

Terminal 5

818

4,744

3,926

17%

6,468

Terminal 10

309

4,607

4,298

7%

4,412

Security

949

3,258

2,309

29%

826

Terminal 115

3,226

3,793

567

85%

1,841

All Other
Total Seaport

4,986
11,172

9,611
30,784

4,625
19,612

52%
36%

13,752
30,618

$ in 000's

EstActs as a % 2010 Plan of
of Budget
Finance

Comments on Key Projects:
Full year spending for Seaport was 36% of the Approved Capital Budget.
Projects with significant changes in spending were:
 Terminal 18 Street Vacations - Due to changes in the timing of the project, some spending was
moved out to 2011.
 Terminal 18 Pile Cap Improvements - Funds moved to 2011. Project under evaluation.
 Terminal 10 Interim Development - Construction pushed to 2011.
 Terminal 5 Crane Cable Reels - Equipment delivery expected in 1st quarter 2011.
 Security - Security Grant Round 6 projects are currently expected to come in $1M lower than
authorized. Received final approval from FEMA to utilize the $1M on other projects in 2011.
Spending on Security Grant Round 7 projects delayed into 2011.
 All Other - Primary difference is due to delays in small capital projects and in finding appropriate
capital projects to be funded under the Green Port Initiative.
Changes between the 2010 Plan of Finance and the 2010 Approved Budget represent modifications in
2010 spending estimates made after determination of 2009 actual spending.

18

IV.

REAL ESTATE DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10

FINANCIAL SUMMARY

$ in 000's

2009
Actual

2010
Actual

2010
Budget

Budget
Var $
Var %

Operating Revenue

30,132

29,820

29,798

22

0%

Total Revenues

30,132

29,820

29,798

22

0%

Total O perating Expenses

29,569

31,499

32,956

1,457

4%

Net O perating Income

563

(1,678)

(3,158)

1,479

47%

Capital Expenditures

74,039

3,965

11,793

7,828

66%








A.












Total Real Estate Division revenues are $22K, or 0.1%, favorable to budget due to higher activity at Bell
Harbor International Conference Center and higher occupancy at Fishermen's Terminal. Amounts were
largely offset by unfavorable revenue variances resulting from closure of the Portside Café (more than offset
by expense savings), lower activity at World Trade Center Club and higher vacancies at commercial and
industrial properties.
Total Operating Expenses are $1,457, or 4%, favorable due to closure of the Portside Café, salary benefits
rates below what was assumed in the budget, cost savings related to activities at World Trade Center Club
and Bell Harbor International Conference Center, lower maintenance expenses due to delays in project start
dates, and lower direct charges and allocations from Corporate. Favorable variances were partially offset by
higher utility costs and unexpected litigation reserves.
Net Operating Income for 2010 is $1,479K above budget for the year and $2,241K below 2009 Actual.
Capital spending for 2010 was $4.0 million or 34% of the Approved Annual Budget amount of $11.8 million.

BUSINESS EVENTS
Occupancy levels at Commercial Properties were at 88% at the end of the 2010, which is below the 90%
target for the 2010 Budget, but above comparable statistics for the local market at 84%.
For 2010 full year average, moorage occupancies at Fishermen's Terminal exceeded 2010 Budget targets and
at the Maritime Industrial Center were below target. Recreational Marinas were on target at 94% occupied.
Vessel Liability Insurance requirement effective at Fishermen's Terminal on January 1, 2010. A monitoring
and tracking process was implemented at all Harbor Services' facilities, for almost 2,000 customers, to
ensure continued compliance at 100%.
2010 event activity for Bell Harbor International Conference Center, Maritime Event Center and Smith Cove
Cruise Terminal, as measured by number of attendees/guests, was 26% over budget and 23% over 2009.
Under the management of Columbia Hospitality, 5 events were held at the Smith Cove Cruise Terminal.
This was the first year of using the new facility as an event site.
Former Portside Café management agreement was terminated in May. Through an RFP process the spaced
was leased and operations at the Café commenced in early October. Net savings to the Port in 2010 was
approximately $50K.
Closed sale on portions of Eastside Rail Corridor to the City of Redmond and Puget Sound Energy.
In the 1st quarter, a new lease was executed with water-dependent tenant, Arctic Storm Management Group,
for Office and Warehouse/Storage space at Pier 69.
Electrical consumption at Pier 69 headquarters was the lowest recorded in the history of the building. There
has been a 50% reduction in consumption since 2000.
Pier 69 headquarters earned the ENERGY STAR label for buildings
Reached settlement with the City of Des Moines regarding South Correctional Entity (SCORE) jail facility

19

IV.

REAL ESTATE DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10

B.

KEY PERFORMANCE METRICS

Shilshole Bay Marina Occupancy
Percent Linear Footage Occupied

120.0%

100.0%
2009 Actual
80.0%
2010 Budget
60.0%
2010 Actual
40.0%
20.0%

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Fishermen's Terminal Moorage Occupancy
Percent Linear Footage Occupied

120.0%
100.0%
2009 Actual
80.0%
2010 Budget

60.0%
2010 Actual
40.0%
20.0%

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Commercial Building

Percent Occupied

100%
90%

95%

95%
90% 88%

94%
90%

90%

89%

93%

87%

90%

88%

2009 Actual

80%

2010 Target
2010 Actual

70%

60%
Qtr 1

Qtr 2

Qtr 3

Qtr 4

Net Operating Income Before Depreciation By Business
$ in 000's

2009
Actual

2010
Actual

2010
Budge t

2010 Bud Var
$
%

C hange from 2009
$
%

Recreational Boating

2,052

1,878

1,236

642

52%

(173)

-8%

Fishing & Commercial

(1,753)

(2,543)

(3,113)

571

18%

(789)

-45%

Commercial & T hird Party

661

212

(436)

648

149%

(449)

-68%

Eastside Rail

(79)

(637)

(358)

(279)

-78%

(558)

-709%

RE Development & Plan

(318)

(591)

(486)

(105)

-22%

(273)

-86%

Environmental Reserve

(0)

2

0

2

NA

2

Total Re al Estate

563

(1,678)

(3,158)

1,479

47%

(2,241)

20

NA
-398%

IV.

REAL ESTATE DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10

C.

OPERATING RESULTS

$ in 000's

2009
Actual

2010
Actual

2010 Bud Var
$
%

Budge t

C hange from 2009
$
%

Operating Revenue

30,132

29,820

29,798

22

0%

(312)

-1%

Total Re ve nue

30,132

29,820

29,798

22

0%

(312)

-1%

Direct Expenses

27,525

29,503

30,949

1,445

5%

1,979

7%

0

(2)

0

2

NA

(2)

-1376%

Divisional Allocations

(3,200)

(3,485)

(3,802)

(317)

-8%

(284)

-9%

Corporate Allocations

5,244

5,481

5,808

327

6%

237

5%

Total Expe nse

29,569

31,499

32,956

1,457

4%

1,930

7%
-398%

Envir Remediation Liability

NO I Be fore De pre ciation

563

(1,678)

(3,158)

1,479

47%

(2,241)

Depreciation

9,949

10,025

9,659

(366)

-4%

76

1%

NO I Afte r De pre ciation

(9,386)

(11,703)

(12,817)

1,114

9%

(2,317)

-25%

Total Real Estate revenues were $22K favorable to budget. Key variances are as follows:
Harbor Services: Favorable $288K
 Recreational Boating favorable $28K. The variance amounted to less than 1% of budget.
 Fishing and Commercial favorable $260K due to a shift in the mix of boat sizes to larger vessels. In addition,
a delay in the net shed loft removal project has allowed for continued revenue.
Portfolio Management: Unfavorable ($47K)
 Commercial Properties unfavorable ($405K) primarily due to the reconciliation payment to Clipper at P69
($252K). The payment is to reimburse the tenant for previously incurred street permit costs that per the lease
are to be paid by the Port. Future costs will be considered rental credits and are included in the 2011 Budget.
Higher than anticipated vacancies at T102 and Fishermen's Terminal Office & Retail also contributed to the
negative revenue variance ($227K). The variances are partially offset by Fugro revenue not anticipated in
the 2010 Budget $68K.
 Third Party Managed Properties favorable $358K due to higher than anticipated activity at the Bell Harbor
International Conference Center $562K partially offset by lower activity at Bell Street Garage ($60K) and
World Trade Center Seattle ($140K).
Eastside Rail Corridor: Unfavorable ($41K)
 Eastside Rail Corridor unfavorable ($41K) due to considerable unknowns at time of Budget. Budgeted
revenue for the corridor was a rough estimate.
RE Development and Planning: Favorable $6K
 Terminal 91 General Industrial favorable $6K due to unanticipated revenue from Pacific Maritime
Association and United States Seafoods. The positive variance is partially offset by M.T. Housing vacating
Terminal 91 in 2009. The 2010 Budget assumed occupancy throughout the year.
Facilities Management: Unfavorable ($204K)
 Pier 69 Facilities Management ($204K) due to lower revenues from the Pier 69 Café. The management
agreement associated with the Pier 69 Café was terminated April 30, 2010. A new lease has been signed for
the space, but revenue will be reported under Portfolio Management.
Maintenance: Favorable $20K
 Maintenance $20K due to unbudgeted license to use fees from parks and recycling fees.

21

IV.

REAL ESTATE DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10

Total Real Estate expenses were $1,457K favorable to budget. Key variances:











Salaries and Benefits for Real Estate employees (excluding Maintenance) favorable $541K primarily due to
budgeted higher than actual benefit percentages $464K.
Third Party Management Expense and Management Fees related to the Pier 69 Café were favorable $295K
due to the termination of the management agreement on April 30, 2010.
Third Party Management Expense and Management Fees related to the World Trade Center Club, World
Trade Center West and Bell Harbor International Conference Center were favorable $340K due to expense
controls by third party managers.
Outside Services (excluding Maintenance, Corporate, Capital Development, and Capital to Expense) were
favorable $457K primarily due to unused and delayed Eastside Rail Corridor consulting and reimbursement
expenses $423K.
Maintenance expenses were favorable $419K primarily due to longer than expected lead times in getting
scheduled work underway in 2010.
Corporate costs, direct and allocated, were favorable $437K primarily due to positive variances in Human
Resources $124K, Accounting & Financial Reporting $88K, Police $71K, Public Affairs $42K,
Contingencies $66K, and Internal Audit $39K.
Utilities unfavorable ($255K) due to higher surface water and garbage costs partially offset by lower steam
costs.
Litigated Injuries and Damages unfavorable ($470K) primarily due to reserve set up related to Eastside Rail
Corridor.
Capital to Expense unfavorable ($121K) due to the expensing of capital costs associated with projects to
upgrade the Bell Street Garage and to install cathodic protection on pilings at Pier 69.
All other variances netted to an unfavorable ($186K) or less than 1% of Total Expenses budgeted.

NOI Before Depreciation was $1,479K favorable to budget.
 Depreciation was ($366K) unfavorable to budget primarily due to higher than anticipated depreciation at
SBM ($174K). The variance amounted to 3.8% of budget.
NOI After Depreciation was $1,114K favorable to budget.
Change from 2009 Actual
Net Operating Income Before Depreciation decreased by ($2,241K) between 2009 and 2010 as a result of lower
revenue and higher operating expenses. Operating Revenue decreased by ($312K) due to higher vacancies at
World Trade Center West, Terminal 102, Fishermen's Terminal Office & Retail, and the Tsubota Steel site as
well as reimbursement payment to tenant at P69 and closure of the Portside Café. Expenses increased by
$1,930K in 2010 due to higher expenses for the Eastside Rail Corridor $672K, higher expenses associated with
tenant improvements, higher expenses associated with Bell Harbor International Conference Center (more than
offset by higher revenue), higher charges from Environmental Services, and higher Corporate direct charges and
allocations. In addition, 2009 included an expense credit for reversal of prior year OPEB accruals amounting to
$267K. Increase in expense amounts were partially offset by reduction in expenses due to closure of Portside
Café and lower bad debt expenses.

22

IV.

REAL ESTATE DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10

D.

CAPITAL SPENDING RESULTS

$ in 000's
Small Projects
FT NW Dock Fender System
RE M aintenance Shop Solution
RE Division Green Initiative
Fleet Replacement
All Other
Total Real Estate

2010 Actual
836
267
379
0
743
1,740

2010
Approved
Budget
2,321
2,000
1,800
1,300
950
3,422

3,965

11,793

Variance
EstActs to
EstActs as a % 2010 Plan of
Budget
of Budget
Finance
1,485
36%
1,810
1,733
13%
2,000
1,421
21%
2,100
1,300
0%
1,300
207
78%
950
1,682
51%
3,966
7,828

34%

12,126

Comments on Key Projects:
The Real Estate Division spent 34% of the 2010 Approved Budget.
Projects with significant changes in spending were:
 FT NW Dock Fender System - Construction moved back to 2011.
 RE Division Green Initiative - Determination of projects to move forward was deferred until 2011.
 RE Maintenance Shop Solution - Projects delayed until 2011. Expect to complete in 2011.
 Small Projects - Projects delayed until 2011.
Changes between the 2010 Plan of Finance and the 2010 Approved Budget represent modifications in 2010
spending estimates made after determination of 2009 actual spending.

23

V.

CAPITAL DEVELOPMENT DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10

A.

BUSINESS EVENTS


























Implemented new management structure in AVPMG eliminating one layer, completed reorganization and
restructuring of administrative functions and of the airfield program team, improved workload projection and
increased project management staffing for increased workload.
Completed Preconditioned Air project design and construction contract awarded.
Consolidated Rental Car Facility projects - continued to make progress toward the March 2012 opening date.
Completed Runway 16C panel replacement, ahead of schedule and on budget.
State's Capital Projects Advisory Review Board approved the Port's first design-build project, the escalator
renewal/replacement project. Procurement process nearly complete by the end of 2010.
Demobilized temporary backup power in the spring and reinstalled in the fall for the winter rainy season.
Conducted training in Contract Pricing, Source Selection and Prevailing Wage Administration.
Developing Purchase-Card procedures; anticipated start date Q1 2011.
CPO initiated a quarterly public owner's forum with representatives from Sound Transit, King County,
University of Washington, and City of Seattle.
Held Port-wide auction at the former warehouse and distribution center, November 20, 2010.
Operating Divisions requested direct charge and expense project work in excess of those identified in the
operating budget. Execution resulted in variance.
Budgeted significant overtime for the construction management group did not occur, resulting in lower
project charges to capital projects.
Upgraded Water Tower, included painting, cubicle build out and signage to increase efficiency and
utilization of the space.
Engineering worked closely with CDD staff and accounting to finalize development and implementation of
new overhead rate methodology and revised Port policies for capitalization and department expense for 2011.
Completed HRD position re-evaluation of the entire Engineering Department.
Completed Several key projects in 2010 included the Emergency Generators, Burien Demolition, Town &
Country Demolition, T-91 Cruise Terminal Modification.
PCS moved from the Kilroy office building to the Airport Office Building (AOB) resulting in $300K annual
savings.
Completed T115 Dock Reconstruction.
Started North Harbor Island Mooring Dolphins construction project at year-end.
Started East Marginal Way Grade Separation project and scheduled for completion in September 2011.
Completed Phase 1 of T86 Grain Facility Modernization project and Phase 2 work in design.
Executed FT NW Dock Fender System Replacement, FT South Wall Reconstruction Phase IV and MIC
Central Seawall Replacement construction contracts in 4Q.
Completed T-5 Maintenance Dredging.
Awarded T-18 South Fender Replacement and Damaged Fender Piles Repair and underway.

24

V.

CAPITAL DEVELOPMENT DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10

B.

KEY PERFORMANCE METRICS
Key Indicators

2010

Construction Soft
Costs

($ in 000's)

36 month rolling
average from

Total Construction:

Q1 2008 thru Q4
2010
Cost Growth During
Construction

Project Schedule
Growth

Small Business
Participation

Customer Score Card

Environmental

Safety

Performance
Evaluation
Timeliness

2010 Procurement
Schedule:
Total Time FRS Execution

Total Costs
Total Soft:

2009/Notes
Limit construction soft costs (design,
$ 1,041,985 (100%) construction management, project
management, environmental
$ 831,713 (80%) documentation) to no more than 25%
$ 210,271 (20%) of total capital improvement costs.

Total Completed Projects YTD:

11

Discretionary Change:

4.7%

Mandatory Change:

5.75%

Limit average mandatory change cost
growth to 4% of construction contract
award.
Limit average discretionary change
cost growth to 4% of construction
contract award.

($ in 000's)
Total Completed Projects YTD: 11
Average Growth Completed Projects: 69.4%
Cumulative Value YTD: $65,228
($ in 000's)
Goods & Services
Major Publics Works
Small Works

$7,553
$10,869
$3,768

Limit time growth from initial
Commission project authorization to
substantially complete to no more than
10% of originally allotted duration.
Goal:
13.6% Goods & Services = 10%
14.4% Major Public Works = 8%
83.0% Small Works = 60%

Total Projects
16
Scorecards Received
15
Total Points
370
Total Score
321.16
Average Score (%)
86.8%
Total Applicable Projects: 19
Total Environmental incorporated or pending:
16
Average: 84.2%
2010
2009
Total Points
2,595.0
1910.0
Total
2,395.8
1724.5
Average Score (%)
92.5%
90.2%
TRIR
5.4
1.8
LTIR
0
0.4
Q4
2010
Total PREPs due:
48
182
Total PREPs on time:
0-30 days (CDD)
41
156
(85.4%) (85.7%)
0-60 days (HRD)
46
24
(95.8%)
(99%)
Good & Services
81 days
Major Public Works
62 days
Small Works
56 days
Service Agreements
256 days
25

Survey all projects; average 85% of
total possible points on scorecards
returned.

Incorporate Executive Policy and
Procedure 15 and/or LEED process in
every project.
Average 90% of possible points.
Limit annual contractor workplace
injury rates to 6 recordable accidents
and 2 time lost accidents per 200,000
hours worked.
98% PREPs completed within 30 days
of anniversary date.

Average number of days.

V.

CAPITAL DEVELOPMENT DIVISION FINANCIAL & PERFORMANCE REPORT 12/31/10

C.

OPERATING RESULTS

$ in 000's

2009
Actual

Notes

Total Revenues

-

2010
Actual Budget
36

2010 Bud Var.
$
%

-

36

0.0%

EXPENSES BEFORE CHARGES TO CAPITAL PROJECTS
Capital Development Administration
Engineering
Port Construction Services
Central Procurement Office
Aviation Project Management
Seaport Project Management
Total Before Charges to Capital Projects

340
9,984
7,354
3,224
5,554
2,735
29,192

387
13,574
8,552
4,171
6,150
2,672
35,505

7
3,611
666
884
1,016
(21)
6,163

1.8%
26.6%
7.8%
21.2%
16.5%
-0.8%
17.4%

CHARGES TO CAPITAL PROJECTS
Capital Development Administration
Engineering
Port Construction Services
Central Procurement Office
Aviation Project Management
Seaport Project Management
Total Charges to Capital Projects

(9,051)
(8,572) (12,418)
(4,300)
(3,998)
(5,228)
(1,552)
(1,507)
(1,983)
(4,554)
(3,991)
(5,006)
(1,904)
(1,939)
(1,971)
(21,361) (20,007) (26,607)

(3,847)
(1,230)
(476)
(1,015)
(32)
(6,600)

0.0%
31.0%
23.5%
24.0%
20.3%
1.6%
24.8%

7
(236)
(564)
408

1.8%
-20.4%
-17.0%
18.7%
0.0%
-7.6%
-4.9%

OPERATING & MAINTENANCE EXPENSE
Capital Development Administration
Engineering
Port Construction Services
Central Procurement Office
Aviation Project Management
Seaport Project Management
Total Expenses
Notes:

340
934
3,054
1,672
1,001
831
7,831

380
9,963
7,886
3,287
5,134
2,693
29,343

380
1,391
3,888
1,780
1,143
754
9,335

387
1,156
3,324
2,188
1,144
701
8,898

(53)
(437)

Summary of Variances
FTEs: 46.5 vacancies
Workers Compensation: ($77K) All CDD
PCS: ($564K) primarily due to all but $465K of $2.2M Expense Work (wages/benefits, Small Works
construction services, expense project overhead) transferred to PCS budget from operating divisions.
 STIA backup power project
 Town & Country and Burien Demolition
 Bird Deterrent Project
 Vacca Site work
 Miscellaneous Small Construction
ENG: ($236K) due in part to expense project overhead and to intra-departmental allocation methodology. This
methodology is being changed for 2011.
SPM: ($53K) due primarily to outside consultants for expense projects not budgeted in SPM.

26

VI.

CORPORATE FINANCIAL & PERFORMANCE REPORT 12/31/10

A.

BUSINESS EVENTS


























Completed and unfolded Port's Centennial Website with map, timeline and stories of the Port.
Collaborated with partner agencies to communicate effectively about the importance of the SR-99
replacement to the Port's ability to generate jobs.
Worked with FAA officials to plan and manage a press conference at Sea-Tac at which Secretary of
Transportation identified Sea-Tac Airport and Alaska Airlines as the leading edge agencies in developing and
implementing environmental programs in the aviation industry. The story was covered nationally.
Managed media interest in the new TSA pat-down policies; managed media questions about multiple taser
events near the airport; managed multiple requests for information about Class B Air Space issues; managed
media regarding the Part 150 Public Workshop; managed media during the snow event in November.
Worked with partner agencies to communicate safety messaging around munitions found at Smith Cove
Cruise Terminal, insuring accurate coverage of technical aspects, and protecting Port's cruise business'
public license to operate.
Produced two employee forums at P69 and airport, received positive comments; people appreciated the
change in format. Great employee attendance at both forums.
Implemented Workplace Responsibility Program. Code of Conduct was delivered to all Port employees and
process for feedback provided. Intake system implemented. Training program is being developed.
Finalized the medical and dental third party administration contracts for the Port's self funded benefit
program and received approval from the State Risk Manager on the Port's application for self funding.
Wellness Reward participation rate was 98%.
The Wellness Fair was attended by over 300 employees.
530 employees participated in 19 onsite Spirit and Wellness classes. Classes this year were provided by
Wellspring, our EAP provider.
Successfully completed annual health benefits and Flexible Spending Account Open enrollment.
Transitioned membership of Development and Diversity Council, bringing on 19 new members chosen after
an application process.
Awarded the "Certificate of Achievement for Excellence in Financial Reporting" from the Government
Finance Officers Association (GFOA) of the United States and Canada for its 2009 Comprehensive Annual
Financial Report (CAFR) for the 5th consecutive year.
Completed the SAO Performance audit of the Port's real estate management. The Port received
commendation from the SAO contract audit firm (TCBA) for the excellent cooperation and support received
from the Port.
Selected a vendor and finalized the Statement of Work for redesigning the Port of Seattle's internet. This will
improve external communications and business operations while also increasing transparency and public
understanding.
Successfully implemented enterprise asset and service management software, upgraded the ID Badge
Printers, replaced the Permit Compliance Tracking System, enabled free wireless access at the airport,
implemented the IronPort Email Filter, expanded the ticketing system at the airport, and deployed security
technology and infrastructure for the Marine Domain Awareness project.
Received the Distinguished Budget Presentation Award from Government Finance Officers Association
for the third consecutive year.
Filed the 2011 statutory budget with King County Council and King County Assessor on December 2nd
within prescribed deadline as required by law.
Issued Revenue and Refunding Bonds for $15 million present value savings.
Completed PFC Refunding for $14.7 million present value savings. Received ratings upgrades from
Moody's and S&P.
The Police department submitted grant applications to augment Seaport Security, and has been
successfully receiving grant funding for vehicles and equipment. Acquisition of the proceeds of these
grants is projected to be mid 2011.

27

VI.

CORPORATE FINANCIAL & PERFORMANCE REPORT 12/31/10

B.

KEY PERFORMANCE METRICS
Key Indicators
A. High Performance Workplace:
1. Occupational Injury Rate
2.
3.
4.
5.
6.

Lost Work Day Case Rate
Injury Cost per Worked Hour
Total Lost Work Days
Contract Administration Issues
Employee Training
a) New Employee Orientation
b) REALeadership Program
c) Budget Training
d) MIS Training
e) Annual Safety Program
7. Job Openings
8. Applications Received
B. Transparency:
1. Rate of Public Meetings
2. Port 101s - # of Attendees

3. Public Disclosure Requests
4. Website Visits
a) Port Website Visits
b) Environmental Report
c) Annual Report Readership
d) E-newsletters & Bulletins

C. Accountability:
1. Internal Audits Completed
2. % of Audit Plan Completed
3. Preventable Vehicle Incidents
D. Other Services and Support:
1. No. of ICT Work Orders
2. No. of ICT Projects Completed
3. Deployed Laptops
4. No. of ICT Projects Completed
on Budget
5. Police Service Calls
6. Police Arrests

2010

2009/Notes

5.24 (injuries for every 100
workers)
2.17
$.52
778
28

5.94; lowest recordable injury
rate
2.10, increased 3%
$1.19, decreased 56%
1085, decreased by 28%
29, decreased by 1

58
27
8 classes and 68 users
7 classes and 75 users
96%
181
7,334

69, decreased by 11
29, decreased by 2
8 classes and 78 users
No classes in 2009
93%, increased by 3%
170, increased by 11
5,268, increased by 2,066

18
88 for Airport 101
106 for Cargo 101
125 for Ship Canal 101
150 for Duwamish River 101
281

16, increased by 2
71 for Airport 101
86 for Cargo 101
73 for Cruise 101
158 for Duwamish River 101
199, increased by 82

9,797,236 page views
1,033 readers
4,553 visits for 2010
Community News 1,867
Cargo News 679
Shilshole News 2,400
OSR News 364
Constant Contact 16,142

8,644,671 page views
Not Available
2,565 total visits for 2009
Constant Contact 18,022 at yearend, a decrease of 10%

16
84%
112, 75 preventable

23, decreased by 7
91%, decreased by 8%
107, 53 preventable

20,808
19
1,405
95%

22,845, decreased by 9%
29, decreased by 10
1,063, increased by 32%
90%, increased by 6%

58,741 calls received
614 with no warrant
399 with warrant

61,809, decreased by 5%
778, decreased by 164;
684 with warrant, decreased by
285
32 litigations and claims,
decreased by 4
12, decreased by 8

7. Attorney Services

28 litigation and claims

8. Labor Contracts Negotiated

4
28

VI.

CORPORATE FINANCIAL & PERFORMANCE REPORT 12/31/10

C.

OPERATING RESULTS

$ in 000's

2009
Actual

Notes

Total Revenues
Executive
Commission
Legal
Risk Services
Health & Safety Services
External Affairs
Economic & Trade Development
Human Resources & Development
Labor Relations
Information & Communications Technology
Finance & Budget
Accounting & Financial Reporting Services
Internal Audit
Office of Social Responsibility
Police
Contingency
Total Expenses

1

2010
Actual
Budget

2010 Bud Var.
$
%

374

610

18

592

3289.4%

1,551
750
2,702
2,526
913
4,918
1,441
3,913
542
17,505
1,635
5,836
978
1,431
18,409
420
65,481

1,356
831
3,475
2,618
1,001
5,553
4,107
675
18,765
1,455
5,939
990
1,280
19,273
21
67,391

1,536
868
3,613
2,859
1,095
6,002
4,988
784
19,033
1,529
6,716
1,109
1,458
20,314
55
71,958

181
37
137
241
94
449
881
109
268
74
777
119
178
1,040
33
4,567

11.8%
4.3%
3.8%
8.4%
8.6%
7.5%
0.0%
17.7%
14.0%
1.4%
4.8%
11.6%
10.8%
12.2%
5.1%
60.8%
6.3%

Notes:
1) Economic & Trade Development was dissolved for 2010.

Corporate revenues were $592 thousand favorable compared to budget due to the higher operating grants.
Corporate expense performance for the year-ended 2010 was $67.4 million, $4.6 million or 6.3% favorable
compared to budget and $1.9 million or 2.9% higher than 2009. This favorable variance was primarily due to
cost savings in the reduction of the benefits rate and several vacant positions.
All Corporate departments have a favorable variance.

D.

CAPITAL SPENDING RESULTS

($ Millions)
Annual Results:
2010 Plan of Finance
2010 Approved Budget
2010 Actuals
Variance (Budget vs Actuals)

$
$
$
$

10.51
16.66
3.82
12.84

29